United States of America

USD is weakening against JPY, strengthening against GBP, and has ambiguous dynamics against EUR.

Investors focus on September labor market data. Employment increased by 254.0K, exceeding the forecasts of 147.0K and 159.0K previously, while the unemployment rate fell from 4.2% to 4.1%. Average hourly earnings increased by 0.4% MoM, exceeding expectations of 0.3%, and by 4.0% YoY, compared to 3.8%. These statistics increase the likelihood of a more cautious approach to adjusting the US Fed’s monetary policy. Commenting on the situation, Federal Reserve Bank of Chicago President Austan Goolsbee called the employment report excellent. He said the regulator should significantly cut the interest rate over the next 12–18 months. In addition, analysts at JPMorgan Chase & Co. and Bank of America Corp. Global Research previously expected borrowing costs to change by –50 basis points in November. However, now, they are counting on –25 basis points, as do most experts.

Eurozone

EUR is weakening against JPY, strengthening against GBP, and has ambiguous dynamics against USD.

Today, a block of economic data from the Eurozone was released. The August retail sales increased by 0.2% MoM, justifying forecasts, and by 0.8% YoY, several expectations of 1.0%. The October Sentix investor confidence index increased from –15.4 points to –13.8 points, beating preliminary estimates of –14.6 points. Experts note that investors are counting on the recovery of the European economy after the European Central Bank (ECB) began easing monetary policy and announced measures to support the Chinese economy. Sentix analysts said that the downward trends in the Eurozone stopped, and now, there was an exit from stagnation, possibly hampered by the state of German industry. The August German industrial orders fell by 5.8% against estimates of –1.9%. Representatives of the German Ministry of Economy said the country’s economy could shrink by 0.2% this year.

United Kingdom

GBP is weakening against USD, EUR, and JPY.

In September, house prices rose by 0.3% instead of the expected 0.2% MoM and by 4.7%, the highest since November 2022, YoY, according to Halifax Bank Plc. The bank’s experts noted that wage indexation and the reduction in borrowing costs by the Bank of England increase confidence among potential property buyers, and the expectation of further easing of monetary policy and increased availability of mortgage lending will contribute to a further recovery in the construction sector.

Japan

JPY strengthens against USD, GBP, and EUR.

The Bank of Japan’s quarterly report on the regional economy was published today. According to the document, accelerating wage growth boosts consumption, so more companies are shifting costs to labor, indicating progress in meeting the prerequisites for further interest rate hikes. However, the regulator warned that some small and medium-sized enterprises are having difficulty generating sufficient profits for the necessary wage indexation. The data raises the possibility of the Bank of Japan tightening monetary policy again by the end of the year, despite Prime Minister Shigeru Ishiba’s vocal opposition to such moves.

Australia

AUD is strengthening against GBP but weakening against EUR, JPY, and USD.

Investors focus on the Reserve Bank of Australia’s (RBA) meeting minutes, which may contain hints about further action. Two weeks ago, officials kept the interest rate at 4.35%, slightly softening the tone of the accompanying statements and stating that a reduction in borrowing costs soon is unlikely. However, a new tightening of monetary policy is no longer on the table.

Oil

Fears of increasing geopolitical tensions in the Middle East and the risk of large-scale disruptions in oil supplies from the region continue to contribute to the rise in oil prices.

Israel is currently holding back from launching retaliatory missile attacks on Iranian infrastructure, and experts believe that the US government will try to reduce the likelihood of further confrontation between the countries, trying to prevent further increases in oil prices ahead of the presidential elections. In addition, analysts believe that OPEC has sufficient production capacity to compensate for a possible oil shortage on the market.